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HOW TO SPOT FINANCIAL/ INVESTMENT SCAMS

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abu mohammed, Muadh_Khan, Yasin
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#1 [Permalink] Posted on 16th December 2019 19:43
Bismillah Ar-Rahman Ar-Raheem

HOW TO SPOT FINANCIAL/ INVESTMENT SCAMS


In this day and age financial or investment scams can be particularly difficult to spot. These scams are being actively promoted on social media across the globe. Those who invent these schemes know that potential victims will do a certain amount of due diligence but they hope that people will not probe too deep to unearth the truth and that peoples greed to make a quick buck, to get rich quickly will make them part with their money. Many recruit individuals who appear to be reasonable, well educated, some with titles (such as doctors), experienced in finance and investing to promote the scams. Such tactics make it extremely difficult for the average person not to be attracted and become a victim of such schemes. Indeed, many of those promoting the scam are unaware of the fact that the whole scheme is a scam, they are just being used and promoting these scams to their feed their own desire to get rich quick. Many unsuspecting individuals "invest" simply because those promoting these scams seem credible, they appear to be honest, good Muslims.

Many of these financial or investment scams are based on a pyramid multi-layered marketing hybrid model. Such schemes rely on recruiting a large number of people across the globe, so that a huge number of people are scammed of relatively small amounts of money to line the pockets of the very few at the top of the pyramid. From an Islamic perspective, both pyramid schemes and multi-level marketing schemes are impermissible. Please see fatawa no. 22935 (14/03/1425AH) by the Standing Committee for Academic Research and Issuing Fataawa, fatawa number 1152/ 993-L/ 1429 issued by Darul Ifta, Daul Uloom, Deoband and fatawa by mufti Siraj Desai on this subject.

Here is a list of 20 red flags which one should watch out for, signs which should put you on the alert and to exercise caution.

Beware of phrases like:
1. “Passive income”
2. “Become financially independent”
3. “Guaranteed income”
4. “High returns, No or low risk”
5. “You won't have to work again”
6. “Revolutionary” “Innovative”
7. “Once in a lifetime opportunity”
8. “Look how much I have made since joining….”
9. “If interested PM me”
10. “Don’t delay” “Act now”

Beware of “investment” schemes which involve:
11. Recruiting others into the scheme to earn commission
12. Tiers of membership
13. Compensation plan
14. Bonus points

Beware of “investment” schemes in which:
15. What is being sold is not clear
16. How the income will be generated is not clear
17. The investment is too complicated to understand
18. No detailed documentation of the investment scheme
19. No history or track record of ROI
20. It just seems too good to be true.

It is essential for Muslims to do their utmost to ensure that their earning are halal, that means avoiding dubious forms of income including pyramid (and Ponzi) and multi-level marketing schemes.

Dr. A. Hussain
16th Dec. 2019
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